Tag (SQ): Implied Authority

StarFish Company Ltd, traders in frozen fish, entered into an oral agreement for the supply and sale on credit basis, of all its frozen fish to Asamoah Company Ltd. The affairs and the business of StarFish Company Ltd were undertaken by its Managing Director and one Maxwell Asante. Maxwell Asante was never appointed by the Company as a director, but he transacted business on behalf of StarFish Company Ltd with Asamoah Company Ltd, as if he were a director and the Chief Executive Officer of the Company. Maxwell Asante acted on behalf of the Company by signing the applications for the Company to be registered as an importer, apart from financially assisting the Company to start business. The name of Maxwell Asante also appeared on the Company’s letterhead as one of its directors.

StarFish Company Ltd allowed Maxwell Asante to share in its profits by allocating to him fifty percent (50%) of the last consignment of fish. Maxwell Asante, entrusted the sale of the consignment allocated to him for his benefit to Asamoah Company Ltd and directed that the proceeds of the sale should be paid by Asamoah Company Ltd into the account of his private firm, Sankofa Ventures Ltd. In the course of the transaction, Asamoah Company Ltd paid various sums of money being proceeds of sale of fish supplied to StarFish Company Ltd to both the Managing Director of StarFish Company Ltd and Maxwell Asante. No valid receipts were given for those payments. At the close of business, the trading account of StarFish Company Ltd showed a debit balance of over GH₵16,000.00 against Asamoah Company Ltd. StarFish Company Ltd subsequently demanded that this amount be paid. Asamoah Company Ltd resisted settlement on the grounds that it had already accounted fully for the cost of the fish sold to it on credit.

Required:

In the light of the above facts, explain whether StarFish Company Ltd would be justified in denying Maxwell Asante as an Officer of the Company.